The average price of a barrel of oil has plummeted from over 120 USD / barrel to about 30 USD /barrel in the last three years. There may be a lot of geopolitical reasons why this has happened. There is also an analysis of how long this will persist. Relations between Saudi-Arabia and Iran, the situation in Iraq, OPEC relations and shale-oil boom in the US all play a part in this. But there may be another aspect of this situation which may be more relevant and inevitable than most of us may believe at the moment.

There have been many “industrial disruptions” in the last few decades that most of us never really saw it coming. Products and companies which were household names have disappeared into the oblivion. For example Kodak was a company that was synonymous with photography. The brand was so well know that fifteen years ago when a family got together or there was a good photo opportunity it was popularly referred to as a “Kodak” moment. The company does not even exist now. Not because they were not performing well, but because the product that they were making suddenly became irrelevant. Similarly cassettes and VCRs are gone and children growing up today will only know them as novelties from the past.

An industry disruption, according to an expert in this field from Stanford University in the United States, Tony Seba, is when a new industry or product “disrupts” a previously well-established product or industry. If you look at what happened to Kodak, people did not stop taking pictures, but the way it was being done completely changed. Similarly, music is still popular, but the cassettes and VCRs have been replaced with new and more convenient devices.

A similar disruption is possibly taking place in the automobile industry, at this very moment. Automobiles need petrol or diesel as fuel to function. In fact, more than 50% of crude oil produced gets converted to fuels used by automobiles. But the new generation of cars may not need petrol or diesel at all to function. These may not contain the traditional internal combustion petrol or diesel engine.

A few years ago, nobody had heard of a car company called Tesla Motors. The company was founded by a charismatic US based entrepreneur named Elon Musk, in 2003. The cars made by this company are fundamentally different from cars being produced by other large automobile companies like Toyota, Volkswagen and GM. Tesla cars don’t have a petrol or diesel engine but contain electric motors and batteries. The basic concept is simple. The battery is charged like how one charges a mobile phone or a laptop and the power stored in these batteries is then delivered by electric motors to the wheels. The most amazing thing is that the final product is not an experimental or a concept vehicle anymore, but is a thoroughly acclaimed luxury car which is now being compared to the likes of best traditional cars in the business such as Mercedes Benz S class.

Last year Tesla Motor’s, Model-S was Motor Trend magazine’s car of the year, which is the one of the most prestigious car award in the world for any automobile to win. It is offering warranties of up to 8 years with unlimited mileage. The orders are rolling in and the company is struggling to deliver the number of cars being ordered. A few years ago, nobody would have taken them seriously, but now they have the attention of the whole world.

When a car is driven via an electric motor there are several significant advantages over a traditional internal combustion engine. First of all the maintenance is minimal. Take the example of ceiling fans in our rooms. Even the locally made ones come with lifetime warranties. You don’t need to lubricate them or take them apart, periodically to do maintenance as is the case with petrol and diesel engines This is how reliable and maintenance free electric motors are. Thus a car based on electric motor will be trouble free for a long time and will require almost no maintenance.

There are other advantages too. Motors have a very high torque, meaning swift acceleration for the car. A Tesla can easily accelerate up to 100km / hour in less than 5 seconds. But the biggest advantage is that an electric motor is 85% to 95% efficient and in the comparison internal combustion engine is only 20% to 30% efficient. Thus a motor will convert 85% to 95% of energy that is put into it, into useful power to propel the car on the other hand the best internal combustion engine will only convert 25% of the energy put into it into useful power. The Remaining will be lost and mostly as waste heat. That is why radiators and fans are required to cool the engine all the time.

Arguably there are two technological challenges with electric cars which still need to be addressed. First one is that the battery cannot be charged very quickly and has relatively limited range (about 200 km + on one charge, in case of TESLA). Secondly the cars cannot be recharged very quickly. It will take a few hours to recharge them completely. Obviously, on the other hand a traditional car can be refilled with fuel in a matter of minutes at the pump. And with the current network of petrol pumps the range can be virtually unlimited.

A lot of independent research is happening to surmount these challenges. Tesla, GE and several japanese manufacturers are working to come up with a solutions. There will be a better solution much sooner than later. It can be use of fuel cells or some quick charge battery solution or contactless constant charging on the roads. The technology already exists and just needs to be put in place.

The reason for the current popularity of Tesla, despite limited range and recharging time is that most of us don’t need to drive so much in a day and a range of 200kms or so is more than enough. We can then easily wait to get our recharge at night and have the full range available for the next day.

Another argument can be that we still need fossil fuels to produce the energy required to charge the cars. In the words of Elon Musk the founder of Tesla Motors, we have this convenient fusion reactor in the sky that shows up every day and we already have a way to extract energy from it in the form of solar panels. The price of solar panels has dropped by about 30% every year since 1970 and the population has increased every year by 30% to 40%. In all probability this pace will increase and by 2030 all of the world’s power may come from solar. We don’t even have to cover major masses of land with these panels in order to get all the energy that we need. Just for example the area that needs to be covered with solar panels in order to produce power for the whole of the United States of America is indicated in red square on the map below. As the panels gets more efficient, this area will further reduce and the price will also come down even more.

It is not just Tesla anymore. All the mainstream manufacturers are moving quickly to get the electric variants of their popular models on the road. Audi has an electric Q7, BMW, Porsche and Mercedes have all joined the race. In addition to this, several other powerful players such as Apple, Google and many startups have also joined the race. The results are bound to be astonishing.

So, there may be a major industry disruption in the making. Cars that use fossil fuels may disappear like Kodak films and VCRs in a few years and more than 50% of consumers of oil will move to another source and electricity production will move to solar and we may find that oil will have limited use. It may stay where it is meant to stay, under the surface of earth. And as far as the environmentalists are concerned they may literally have their day in the sun, much sooner than expected.